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VOL. 10, ISSUE 6 (2025)
Bank credit for balanced economic growth: a closer look into MUDRA loans in Kerala
Authors
Priya Sasidharan, Dr. Jacob Joju, Dr. Firos Khan M C, Dr. Manoj P K
Abstract
Balanced economic
growth requires an equitable distribution of financial resources across
sectors, regions, and enterprise sizes. In India, bank credit—particularly
priority sector lending—plays a crucial role in promoting inclusive development
by supporting agriculture, micro and small enterprises, and self-employment.
Within this framework, the Pradhan Mantri Mudra Yojana (PMMY) was introduced to
enhance access to formal credit for micro enterprises through collateral-free
loans. Despite its ambitious objectives, emerging evidence suggests that the growth
of MUDRA loans has not kept pace with the overall expansion of bank credit.
This paper examines the performance of MUDRA loans extended by commercial banks
in Kerala during the period 2020–2025, with a focus on their growth pattern,
category-wise behaviour, and contribution to balanced economic growth. Using
priority sector advances as a proxy for overall inclusive credit flow, the
study analyses trends in disbursement and outstanding credit under the Shishu,
Kishor, and Tarun segments. The findings reveal that while priority sector
advances in Kerala recorded steady growth, MUDRA lending exhibited greater
volatility and relatively slower expansion. The Shishu segment showed declining
sustainability, whereas Kishor and Tarun loans demonstrated relatively stronger
credit absorption. The study argues that without complementary non-credit
support and stronger graduation mechanisms, MUDRA loans may fall short of their
potential to foster durable microenterprise growth. Policy measures aimed at
improving enterprise sustainability and integrating MUDRA lending with broader
development strategies are therefore essential.
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Pages:44-51
How to cite this article:
Priya Sasidharan, Dr. Jacob Joju, Dr. Firos Khan M C, Dr. Manoj P K "Bank credit for balanced economic growth: a closer look into MUDRA loans in Kerala". International Journal of Academic Research and Development, Vol 10, Issue 6, 2025, Pages 44-51
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